Sale of house under bankruptcy

I'm currently a tenant in a house where the landlord has declared bankruptcy. The house is completely paid for, but risked a foreclosure due to unpaid taxes. He offered the house if we paid the back taxes and continued to pay rent for a time afterward on a rent-to-own arrangement, just until the bankruptcy clears. He claims he cannot transfer ownership until it does. Should I be worried about a shady deal?

[lawcastle]

Is the landlord a corporation or a private individual? If it is an individual and he/she filed chapter 7 the unit will likely be sold to satisfy the unsecured creditors. If you have paid the taxes, you will be out of luck. Further, if after the closing of the bankruptcy the LL still has the house and you would like to proceed with this arrangement, there are several factors to consider.

First, if you do pay the back taxes, make sure the payment is made directly to the relevant government entity. Do not give the LL the money and assume he will pay the back taxes. If you do this and the LL doesn't pay the taxes, a tax lien will be placed on the house and a judicial sale will follow. To be sure, you would have a cause of action against the LL, but considering he is already filing for bankruptcy, your prospects of getting money from him are slim.

Second, the statute of frauds requires contracts for the sale of land to be in writing. Thus, you would need to put all the terms in writing. If this is not done, the LL could claim that no such deal was made. Through litigation you would likely win by showing that you paid the back taxes, but it would cost money.

In short, the deal seems very shady and I would be very wary of entering into it*

Best of Luck

*not intended to be legal advice